‘Meter producers need govt’s support’

Before the country’s electricity sector’s privatisation, issuance of meters to consumers was a hydra-headed problem. It has defied all solutions in the post-privatisation regime. The development has left consumers and operators battling with the pains of ‘crazy billings’ and energy theft, among others. Kola Balogun, Chairman of one of the only three meter producers, Momas Electricity Meters Manufacturing Company Limited, puts the blame on the Federal Government. He however proffers solutions to the predicament in this interview with AKINOLA AJIBADE.

What is your take on the government’s plan to allow more players into meter production?

The decision by the government to expand the metering space is good. The Minister of Power, Works and Housing, Mr Babatunde Raji Fashola, has done a good job by identifying the problems in the sub-sector. The plan, if well implemented, will reduce commercial losses which power distribution companies (DisCos), meter manufacturers and other stakeholders have suffered in recent times.

For the government to implement metering policy well, there should be provision for meter asset providers (MAPs) and foreign manufacturers, among others, to enliven the sector. This will make room for more liquidity and competition. Once new players are brought into the sub-sector to ensure availability of meters and there is a commensurate increase in power generation and supply, consumers will not hesitate to pay their electricity bills because they will be convinced that they are not being over billed.

What other benefits will stakeholders get from such initiatives?

The initiative would provide opportunities for asset providers to come into the metering sub-sector of the power industry. Funding is the bane of the metering business and the industry in particular.When asset providers come into the industry, they will provide funds, which, ultimately, will improve the performance of the sector.

To what extent will the idea reduce dependence on imported meters?

The initiative will help in checking influx of imported meters into the country. It is a good idea capable of fostering the growth of the indigenous operators in the metering segment of the electricity industry. The only snag is, the ability of the Federal Government to implement it. If the government is able to adhere strictly to the metering policy in the country, through effective implementation, everybody will enjoy it.

How can foreign domination of meter production and building of power plants in the Nigerian power sector end?

We need to provide well-articulated policies for the sector. I’m talking about policies that are result-oriented, not failed ones. The government should enact a law that would compel foreign manufacturers of meters to set up factories in Nigeria. In Kenya, for instance, as a meter manufacturer, you must show when and where your factory is located before the government allows you to produce Semi-Knock Down (SKD); Complete Knock Down (CKD), or Original Equipment Manufacturer (OEM) meters for the people. Each of these divisions has its own operating licence. Besides, each stage has its own technological implications. SKD factory has the least implications, in view of the fact that small capital is required to set it up, while huge amount of money is needed to set up an OEM factory, as it involves technology transfer.

Which of the three stages of metering production is common?

The commonest one is OEM. Momas Electricity Meters Manufacturing Company Limited (MEMMCOL) has Original Brand Manufacturer (OBM) licence. It is the only company that has that kind of licence in Nigeria. By the virtue of OBM licence, the firm designs its own metering brand, which Nigeria can refer to as its own brand because other meters in the country are not. One unique advantage of a company that has OBM licence is this. Anybody that intends to operate as OBM of meters in another country, must seek approval from previous holder of the licence. By this, MEMMCOL Nigeria Limited is in a position to give approval to people that wish to operate OBM licence.

Investment requirement in the power sector is huge. How will new entrants survive, given that they are already struggling?

The new players would not be able to survive unless they receive support from the government and other industry stakeholders. The reason is because metering is highly capital intensive and a lot of money is required to set up plants for manufacturing of meters. However, old and new players in the sub-sector would survive in view of the decision by the Federal Government to open it up for more players to come in. This will provide enough funding for operators to work with. And with enough funding at the disposal of the operators, they would be able to expand their businesses. People, who have good intentions of setting up factories for production of meters would not find it difficult to do so since they have enough money to play with. Some of us (manufacturers) that have established ourselves would also expand our production in order to create more jobs and further produce optimally. Instead of producing one shift, we would be producing 24 hours in a day.

Are there specific jobs that the initiative would create in Nigeria?

The idea would not create specific jobs. The jobs creation would be comprehensive. Direct and indirect jobs are going to be created. Skilled and unskilled workers would be employed. There would be opportunities to learn about metering processing and thereafter set up Small and Medium Scale Enterprises (SMEs). By so doing, people would be able to produce smaller metering components and in turn provide services in the sector, with a view to earn a living.

Where do suppliers come into the metering sub-sector?

If you look at the sub-sector well, it has the tendency to provide a whole gamut of activities for suppliers, financiers and others. Of importance are meter asset providers (MAPs), who are more or less the financiers in the sub-sector. By virtue of their responsibilities, meter asset providers do have a strong relationship with the power distribution companies (DisCos), ditto the manufacturers of meters. They ensure that the operation of meter’ manufacturing companies are well funded. They fund the activities of current and prospective producers of meters. For instance, if any foreign company intends to set up a metering factory in Nigeria, it must meet the asset providers for funds. Already, MAPs have some engagements with the DisCos in the country. They signed agreement with the DisCos to ensure that they provide funds for the manufacturing meters and also ensure that the DisCos receive allocation, let’s say 10,000 meters or 20,000 meters in a month, depending on the agreements reached with them. They also liaise with the DisCos to ensure that the meters are installed.

What about the certification process for meters? How can this be resolved?

There is the need to find solution to the problem of certification. They need to agree on where and when the meters would be certified-either locally or internationally. Are we sending the meters to the Nigerian Electricity Management Services Agency (NEMSA) for certification or not? We need to set up a platform through which all these issues would be well addressed. When this happens, the meter asset providers would provide funds and also directed that the meters are produced to meet the specification of the countries or destinations which the meters are meant for.

But NEMSA is the only certification agency approved by the Federal Government for such activities.

Nobody is disputing that. What I’m saying is that NEMSA needs to recertify meters that are brought into the country. By so doing, NEMSA would be able to capture the data on the meters well. Not only this, the agency would be able to know whether the meters are for DisCo A, B or C. Through this means, the installers from the DisCos would be able to come to NEMSA to pick their meters. There should be a structure for warehousing the meters and where the installers would come and pick meters and thereafter take them to the consumer’ premises for installations.

Why is installation of meters is a problem in the country?

It is a problem because the sector does not have enough installers and there is the need to train more people for that purpose. Also, a survey of the premises should be carried out with a view to tidy them up. Many premises are not tidy, a development, which suggests that many consumers are not ready for metering. If you should go to some houses, you will see wires and cables criss-crossing each other. By the time, such houses are given to installers to install meters, it becomes difficult for the installers. Mind you the cost of logistics is very high. Getting the instruments ready for installation and transporting them from one location to another is a problem for installers.

What is the way out of these problems?

The solutions are many. First, more people should be employed by the DisCos to instal meters. Secondly, the consumer premises must be tidied up by re-arranging wires and cables on the poles in an orderly way. Thirdly, data on the consumers must be made available by the DisCos. That means the power firms must carry out enumeration exercise to determine how many consumers need meters and how their buildings would be wired and rewired. Fourthly, tests must be carried out on the buildings to prevent electrocution. Before a metering service is carried out in any building, tests must be conducted to prevent leakage(s). Once a leakage occurs in any of the apartments, the person, who occupies the apartment would be thinking that his or her meter is running faster than normal and that some people are exploiting him or her.

What are the effects of electricity leakage to the power firms?

The firms are going to suffer technical and commercial losses. The consequence of such losses is grave for consumers and the companies. The development can cause fire outbreak and further make power firms suffer losses by not being able to collect tariffs adequately. Unless due diligence is carried out to detect the problems, the issue is going to have negative implications on the consumers and the firms. That is what the Minister is trying to say. He said when there is an influx of new players in the sector, they would be able to catalyse the sector in order to make it more business like.

Is it not a misplaced priority if the government neglects generation of electricity for development of the metering sub-sector?

No, it is not. In fact, the first thing the Federal Government should have done before privatisation was to put in place were measures that would have provided meters to at least 90 per cent of the consumers in the country. The reason is because metering is the last stage of the value chain and therefore, must be given priority. That is where the money is protected. The country is supposed to meter virtually all the consumers to the highest level of efficiency, because that is the area that brings money to the sector. Whatever investment a power company is doing upstream (at the highest level), the only protection, which the firm has, is metering. Anything other than metering means that firm is investing in an empty basket. Therefore, metering is the last hope of an investor in the power sector.

Are you saying that metering is a more critical area in the power sector?

Yes, it is. It is quite unfortunate that many people are ignorant of this fact. The sector is battling commercial and technical losses because it does not have effective metering programmes in place. Based on this, the sector needs to provide meters to consumers 100 per cent and thereafter tidy up the premises of the consumers whom the meters are meant for. The sector needs to tidy up the premises by using the right conductor to distribute electricity to consumers. The sector must ensure that good poles and transmission sub-stations are used. Having done this, we would be reducing technical losses, as much as possible.

What can be done to improve supply of Maximum Demand Meters (MDMs) to companies and other high-end users?

Maximum Demand Meters are meters used by higher consumers like industries and big hotels. For DisCos to improve the supply of such meters to big companies, it must identify those companies that need the meters for operation. The power distribution companies need to evaluate consumers with a view to knowing the thresholds of energy consumption needed in the sector.

What is the threshold like?

The threshold is used to know the percentage of energy required by a consumer. For instance, a two-bedroom or three-bedroom apartment needs a threshold of 100 amps, while companies need bigger amps, of 200 amps upward. When companies are advised to have smaller transformers by the power firms, it means such companies need Maximum Demand Meters for operation.

How have DisCos been able to conduct enumeration?

The power firms are unable to conduct enumeration exercise due to funding, which is the major problem facing the nation’s power sector. The energy distributors need to repackage themselves by evaluating their performance. The firms need to evaluate themselves with a view to ensuring that they are financially viable.

How can energy theft be addressed in the sector?

There are several ways of solving the menace of energy theft. First, there is the need to have a strong metering policy on ground to deal with the issue. Secondly, the DisCos must try and issue intelligent meters, through which energy audit would be carried out at any point in time. Thirdly, the DisCos must be encouraged to provide Transmission Metering (TM) facility, a development which would enable them to know whether consumers have been metered 100 per cent and detect stealing of energy.